In Supply Chain Planning & Optimization, Look for Breakthrough Technologies This Year

Analyst Insight: On this 25th anniversary of supply chain planning, expect a rebirth. While innovation in the supply chain market has languished for the past five years due to industry consolidation, over-hyped promises and market maturity, that's going to change in 2011.

-Lora Cecere, industry analyst, Altimeter Group

Companies are recovering from the expense of enterprise resource planning investments and are quickly learning that:

• Stumble. The vision of integrated planning with enterprise resource planning produced an inferior solution due to the lack of depth of planning functionality in ERP systems.

• Failed promise. That ERP is not the de facto data model for the enterprise or the end-to-end supply chain. That inter-enterprise connectivity is not as simple as connecting ERP systems together.

• Search for Agility. While ERP has improved cash-to-cash cycles and information transparency, it has failed to deliver sensing capabilities to drive supply chain agility.

• Birth of New Connectors. As companies try to invest in building the end-to-end value chain, they quickly realize that the traditional definition of customer relationship management (CRM) and supplier relationship management (SRM) are not the natural connectors for that chain. As a result, these application sets will be redefined to enhance value chain relationships.

• Outside-in. Value chain technologies and processes will be built from the outside in (from the customer's customer back into the value chain). As this work develops, companies will find that they will need to stabilize investment in the traditional applications of ERP and advanced planning systems (APS) that were built from the inside out, and invest in sensing mechanisms to translate, shape and sense demand.

As a result, companies are investing in:

• Horizontal process improvement: This includes revenue management, sales and operations planning, supplier development and new product launch capabilities.

• Social platforms will redefine B2B. While traditional B2B programs have focused on transactional efficiency, the new forms of social platforms will enable cross-industry relationships between companies. Look for platforms like Lithium and Jive to find a new home in B2B processing.

The Outlook

2011 will be the year when breakthrough technologies using probabilistic chip logic, parallel processing for a near-real time response, and artificial intelligence to improve sense-and-respond capabilities will drive new types of applications. Companies will quickly learn that the traditional footprint of APS from the 1990s are outdated, and innovators will begin to use these new forms of predictive analytics to gain competitive advantage.